Do people prefer to use PayPal over Credit card while paying online?


Whether you run an online WordPress/WooCommerce Online Business, Sell on eBay, or accept donations online, you likely have accepted Paypal as a form of payment. As a WordPress website design agency, we have designed many E-commerce websites using WordPress and WooCommerce which utilize Paypal as a method of payment. But how trustworthy is Paypal as a payment processor?

This is a question I ask myself quite often as an online seller. Do people prefer to pay for online products and services using Paypal over entering their credit card numbers? Do that layer between them and their actual credit card number add peace of mind? I finally decided to ask our online community using a simple form about their use and trust in Paypal. Below I will insert some of my own personal experience with Paypal and include the results from the survey. There were 93 people who took the survey so the results in the pie charts represent their responses to the questions listed.

One would assume that pretty much everybody has a Paypal account but that is not entirely true. In the rare chance that someone has not come across a need to pay for something using Paypal, there are plenty of people who have been burned by Paypal one way or another. I had a Paypal account that I used for random eBay sales and for processing payments on my website StateofTech.Net. After thousands of successful payments over the course of several years, Paypal gave me the boot. I had one chargeback over that time which I handled without them having to force me and that was it. Everything else was smooth. I know that Paypal made a ton of cash off of my transactions given that they keep an average of 3.0-4.5% per transaction. However, my account was frozen and I was unable to use it for anything, even making purchases myself. In Paypal’s terms of service, they state that you can have one personal and one business Paypal account under your social security number. Any more than that and it needs to be in someone else’s name. I had decided to open a business Paypal account to begin keeping personal eBay stuff and my business sales separate. Two weeks after doing this, Paypal closed both accounts and I have been unable to access either since. After weeks of phone calls and emails, I gave up. They said that their decision to close my accounts was final and that I was unable to open new accounts. The only way I was able to get the money out of my account without waiting 90 days was to use my Paypal credit card and then apply my Paypal balance to the credit card to pay it off. Total crap.

With this bad Paypal taste in my mouth, I started suggesting other services to my clients such as Google Checkout and Google discontinued its Checkout service so that left me to suggest to my clients. I have now been using Stripe for years and have many clients using Stripe as well.

People feel safer using Paypal most likely because they feel like their credit card number remains safe. Paypal also sides with the customer and will take money back from the merchant much faster than the actual credit card company would in a dispute. Paypal does not really protect the merchant that well. Over the years, I am sure that Paypal has had to place strict guidelines over merchant practices due to their tie-in with eBay. You never know what you are going to get out of an eBay auction. However, with an online merchant, you have to figure out how to build trust in your product or service so people don’t feel the need to choose Paypal to feel safer about buying from you. Though I don’t accept Paypal as the default form of payment on my websites, I usually have a note at the bottom that we accept Paypal on an individual basis for those who prefer it.

There is actually more risk by using Paypal than simply using your credit card. Given that the website you are paying through is secure by using an SSL Certificate to encrypt data on that payment page, most of the time your payment data is not stored on that website. None of the websites we build for our clients store credit card data. We don’t want that responsibility. Older websites may store credit card data in their database or worse, send that credit card data to their sales department through an email. However, I still feel that there is more risk by using Paypal. Paypal accounts are hacked all the time. Spoof Paypal emails trick people every day into giving account details to people with malicious intent. It’s frustrating and many of us have gone through a situation like that. If something goes wrong with your credit card, you call your credit card and they handle it. Credit card companies have gotten good at being there for their customers when it comes to fraud.

The only true way to be secure when paying online is to use a disposable credit card number or use a prepaid card. Something which goes away after you use it. I am not sure if Paypal is still offering this, I believe they did at one point but I could be wrong. Nonetheless, if you are that afraid of something happening when shopping online, you should just not do it. I shop online just about every day and many online services have my credit card details for monthly services and return customer shopping. The only issues I have had with my credit cards were when I was traveling and someone most likely copied down my card number when I was using it at a restaurant. Online is often more secure than in-person.

With that said, Paypal has been around for a long time and does give people who don’t understand the backend of online credit card processing a sense of peace of mind.

Paypal continues to make its service easier to use. I used it back in the day when it was just a tool for sending money from one Palm Pilot to another. Now you can do the same thing on pretty much any platform. From a usability standpoint, Paypal is pretty simple. If the website integrated Paypal properly, it should be a simple process. If not implemented properly, you could end up having to enter your name, address, and phone number multiple times, but that’s it. The Paypal app on smartphones makes it even easier to use. I understand why Paypal still stands as the most common choice.

It is often that you see Paypal as an option among other options to pay such as Amazon Pay. Smartphones now have Apple Pay and Google Pay. This gives buyers the option to pay by credit card or go through the Paypal process if they prefer. Some eCommerce systems allow for this, however many do not. If you can support both options, it doesn’t hurt to allow for that. If you want to use a service other than Paypal, I suggest providing your reasoning such as I did with StateofTech.Net.

Paypal used to be the only cost-effective option for small businesses online. Now there are many competitors out there such as, which is what we currently promote as an alternative to Paypal. Online Gateways such as still charge monthly service fees and even Paypal offers a few account types that require a monthly fee for more features.

The reason I decided to suggest to my clients is simply that their platform is easy to use and it’s free. You only pay a flat 2.9% + $0.30 per transaction. Does not matter the card type or where the card came from. Their service works like any other online gateway. Of course with you could expect a slightly better rate but once you factor in monthly service charges and other fees, you probably end up close to 2.9% per transaction unless you are processing large dollar amounts per month and have negotiated a better rate. Stripe rates also improve as you process more payments. I have one client with a 1.95% + $0.30 rate. That is pretty great for online transactions.

Here are some of the responses we got along with the results you see in the above graphs.

To the question of being undecided as to why they like using Paypal or not:

  • If there was a better option I’d use that.
  • It works, but I prefer using a credit card to logging in to my Paypal account.
  • It’s convenient with eBay but I don’t go out of my way to use it otherwise.

To the question of whether or not they feel safer using Paypal or directly inputting their credit card number:

  • They’re about the same now
  • I know how to dispute charges with my credit card, but I don’t know how with Paypal.
  • Depending on the type of website. If it’s online shopping from a small company then I feel more secure having my payment go through PayPal.
  • Depends on where I’m buying from if it is a website like eBay or Amazon I always choose Paypal if it’s a trusted website such as Walmart, Target, Macy’s, etc I always pay directly through my debit card.

What are your thoughts on Paypal? Have you used it for selling, buying, or both? How has that worked out for you? We would love to hear your thoughts. It helps us better choose which services to suggest to our clients.

Leave a Reply

Your email address will not be published. Required fields are marked *